Knife River Corp. announced financial results for the third quarter ended Sept. 30, as well as several acquisitions.
For the three months ended Sept, 30,, the company reported record consolidated revenue of $1.1 billion, a 1% increase from the prior-year record revenue. Although volumes have declined as a direct result of our quality over quantity approach, record revenue was primarily driven by price increases in our aggregates and ready-mix product lines and increased contracting services revenues.
The company also reported record third quarter net income of $148.1 million, compared to net income of $146.7 million in the prior-year period. The company had solid EBITDA contributions from each of its geographic segments, totaling a 6% increase from the prior-year period and a 14.8% increase in the first nine months of 2024, compared to the same period in 2023.
Across each of its segments, the company remains committed to continued improvement of its EDGE initiatives to optimize materials pricing and seek higher margins for contracting services. The results at its geographic segments helped to offset decreased EBITDA at Energy Services, which was expected and which the company has guided to over the past few quarters, as liquid asphalt pricing decreased. Consolidated adjusted EBITDA for the quarter was $245.2 million, compared to $247.5 million in the prior-year period.
“Our third quarter results demonstrate the fundamental strength of our business and the benefits of our segment diversity,” said Knife River President and CEO Brian Gray. “We achieved record quarterly revenue, gross profit and net income, and adjusted EBITDA was near our record from the third quarter of 2023. Our geographic segments contributed record EBITDA of $224.6 million for the quarter, a combined 6% increase year-over-year across the Pacific, Northwest, Mountain and Central segments, which helped us overcome the anticipated EBITDA reduction at our Energy Services segment.
“We are also excited to announce that we have closed on additional acquisitions, which we expect to generate an attractive financial return,” Gray said. “Through Nov., we have deployed $129.3 million of capital on six acquisitions, with a focus on aggregate reserves and construction materials. Purchase multiples were between 6-8 times projected 2025 EBITDA.
“Recent acquisitions include aggregate-specific purchases in key markets, including the assets of Frank B. Marks & Son in Northern California, Rock Products Manufacturing in Central Oregon and a sand reserve in Sioux Falls, S.D.,” Gray said. “Also, on Nov. 2, we purchased the business of Albina Asphalt. Based in Vancouver, Wash., Albina will expand the footprint of our high-margin liquid asphalt materials product line, with terminals in our most profitable geographic segment. While we incurred more corporate development costs during the quarter related to increased acquisition activity, we believe these investments will enhance our long-term profitability. We are excited to have a full pipeline of additional acquisition opportunities in front of us.
“Growth is a key component of our ‘Competitive EDGE’ strategy, and so are pricing optimization, cost control and continuous improvements,” Gray said. “During the quarter, our teams continued to optimize the pricing of our construction materials, control production costs through our Process Improvement Teams and realize higher margins on our contracting services. Our ‘EDGE’ strategy guides our decisions on quality of work over quantity of work.
“We also continue to benefit from a strong public funding backdrop,” Gray said. “We are seeing continued opportunities to bid on projects across our footprint, with record or near-record budgets at most of our state departments of transportation. We have a good schedule of DOT bid lettings coming up for 2025 across our states. Our backlog of $755 million is higher than the same period last year, with slightly higher expected margins. For the sixth consecutive quarter, our year-over-year expected backlog margins have improved, dating back to the launch of our EDGE plan.
“As we look ahead at the full year, including expectations for our segments in the fourth quarter and anticipated acquisition expenses related to our growth program, we are narrowing guidance for 2024 revenue and adjusted EBITDA,” Gray said. “We expect revenue in the range of $2.85 billion to $2.95 billion, and adjusted EBITDA in the range of $445 million to $465 million. We are focused on a strong finish to the year and positioning our business for long-term growth. Thank you to our team members for working safely and for all they do to contribute to Knife River’s continued success,” Gray concluded.